Biz Break: Google, Facebook lead surge in tech stocks

By Mike Murphy, mmurphy@bayareanewsgroup.com

Posted:
06/25/2014 02:38:28 PM PDT

Updated:
06/25/2014 02:38:29 PM PDT

Today: Wall Street brushes off gloomy first-quarter economic report, looks to the future with Google's ambitious plans to have Android run everything, everywhere. Also, is Facebook building an in-office social network?

The lead: Google shares surge on high hopes for wearables

Tech stocks, led by Google and Facebook, surged Wednesday as the markets brushed off a disappointing first-quarter economic report.

At its annual I/O developers conference in San Francisco, Google showed off plans to have its Android mobile operating system running everywhere, from TVs to smartwatches to cars. "We want to create a seamless experience across all these devices," Sundar Pichai, Google's head of Android ad Chrome, said at the presentation. Google's goals now are to "reach the next 5 billion people," Pichai said.

And when the Mountain View tech giant says everywhere, it means it: Pichai said Android has recently passed 1 billion worldwide users for the first time, and Wednesday the company announced a host of new gadgets, including: new third-party smartwatches running on Android Wear; in-car entertainment and navigation called Android Auto; another attempt at set-top streaming video through Android TV, and improvements to Chromecast; upgraded Chromebooks; Google Fit, an API for wearable devices that measure body functions; improvements to Google Docs; and new versions of the Android OS.

Google wasn't alone in posting gains Wednesday. Facebook shares jumped 2.62 percent, or $1.72, to $67.44, on reports that the Menlo Park social networking giant was working on a workplace app dubbed FB@Work. "We are making work more fun and efficient by building an at-work version of Facebook," a source told TechCrunch. Whether it would be targeted for intra-office communications or as a Linked-In-type networking tool is unclear.

Meanwhile, Facebook reported the World Cup is on pace to become the biggest global social media event ever, with 141 million users posting 459 million interactions on its network so far, according to the Wall Street Journal. That would be more posts generated than the Super Bowl, Oscars and Winter Olympics combined, Facebook said. Twitter has also seen a record number of posts thanks to the World Cup, helping send shares up 2.55 percent, or 98 cents, to $39.46.

VMware, the Palo Alto cloud computing company, rose 2.51 percent, or $2.35, to $96.07, after expanding a strategic partnership with telecom giant Verizon, which will resell its AirWatch mobile management platform. San Francisco online review site Yelp jumped 2.86 percent, or $2.17, to $78, after sealing a deal with food delivery company EatStreet. Apple rose slightly, 0.09 percent, or 8 cents, to $90.36, after Credit Suisse analyst Kulbinder Garcha raised his price target for the Cupertino tech giant from $85.71 ro $96. That's based largely on Apple's upcoming foray into subscription-based music following its acquisition of Beats. Meanwhile, European Union antitrust regulators said they would rule on the legality of the Apple-Beats deal by July 30.

Market report: Wall Street brushes off gloomy economic numbers

The economy at the beginning of the year was worse than anyone thought, shrinking at a rate not seen since the Great Recession ended five years ago. But that bad news was largely dismissed by Wall Street on Wednesday, with much of the blame falling on the harsh winter that kept workers from their jobs and made consumers stay home, and stock markets rebounded to their first gains in three days.

Revising its May report, the Commerce Department said Wednesday that the economy contracted 2.9 percent in the first quarter, far surpassing the 1.7 percent decline originally reported. But with the weather better and people spending again, experts say the current quarter has seen significant improvements, with some forecasting 4 percent growth in the April-June period and healthy expansion seen through the end of the year and into 2015.

"We have ample evidence that the first quarter was just a temporary setback for the economy, and we are climbing out of the hole in the current quarter," PNC Finanancial chieg economist Stuart Hoffman told the Associated Press. Moody's Analytics chief economist Mark Zandi agreed: "We should have a much better second half this year and a much better 2015 than 2014," he told AP.

It's not just consumers who are spending more -- businesses are too. After falling 1.1 percent in April, orders for non-military goods rose 0.7 percent in May, Bloomberg News reported, a signal that businesses are spending more, stocking up in inventory and planning investments. That would be correspond to Intel's sales revision earlier this month, which reported stronger-than-expected enterprise sales for the current quarter. An upswing in office-computer spending would be welcome news for Silicon Valley, which has seen its biggest chipmakers and PC manufacturers hit hard by a nearly 3-year decline in computer sales.

And the widely watched Standard & Poor's 500 index: Up 9.55, or 0.49 percent, to 1,959.53.

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Follow Mike Murphy on Twitter at twitter.com/mmmmurf.